Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

<ul>
<li>TEL beats its 1H25 guidance by 12% at Net Income level, increases FY25 Net Income forecasts by 10%, increases dividend by 10%, plus a small share buyback (0.8% of outstanding). </li>
<li>Positive change in the product mix: Legacy capex (incl China) to decline in 2025, AI-related Capex to increase by ~50% YoY.</li>
<li>What’s not to like? The stock is trading at 21x FY25 EPS, 18x FY26, Consensus expects 34% EPS growth in FY25, 22% in FY26. </li>
</ul>


TEL beats its 1H25 guidance by 12% at Net Income level, increases FY25 Net Income forecasts by 10%, increases dividend by 10%, plus a small share buyback (0.8% of outstanding). 
Positive change in the product mix: Legacy capex (incl China) to decline in 2025, AI-related Capex to increase by ~50% YoY.
What’s not to like? The stock is trading at 21x FY25 EPS, 18x FY26, Consensus expects 34% EPS growth in FY25, 22% in FY26. 


Tokyo Electron Beats Its 2Q25 (Sep-24), Raises FY25 Forecast, Increases Dividend, and a Buyback

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Sentiment for AI related rising with NVDA de-risked and outlook strong, despite the marginal beat.</li>
<li>Kioxia IPO pricing at $4.84bn supportive for memory ecosystem names.</li>
<li>Deere numbers and outlook for farming lifting AG machinery names - watch Kubota.</li>
</ul>


Sentiment for AI related rising with NVDA de-risked and outlook strong, despite the marginal beat.
Kioxia IPO pricing at $4.84bn supportive for memory ecosystem names.
Deere numbers and outlook for farming lifting AG machinery names - watch Kubota.


Japan Morning Connection: Risk-On for the AI Ecosystem

Derivatives and Quantitative Strategist

Gaudenz Schneider

Event-Driven

<ul>
<li>This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.</li>
<li>The strategy performs well if the Nifty 50 rises <em>and</em> outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.</li>
<li>Leverage increases both the strategy's payoff and probability of success.</li>
</ul>


This strategy exploits relative value in implied volatilities and combines it with a long Nifty 50 vs. short Nikkei 225 directional view over a period of two months.
The strategy performs well if the Nifty 50 rises and outperforms the Nikkei 225. If both indices decline, neither profit nor loss is incurred.
Leverage increases both the strategy's payoff and probability of success.


EQD | Long Nifty 50 Vs. Short Nikkei 225 - A Relative Value Option Strategy with a Kicker

Asia and Global Semiconductor and Tech Research

Andrew Lu

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.</li>
<li>
<strong>No more Moore's Law</strong>: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.</li>
<li>Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.</li>
</ul>


TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.

No more Moore's Law: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.
Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.


What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Thanks to strong demand from China, 1Q results at Tokyo Electron (TEL) were just bad, not horrible. Operating profit was down 30% YoY on a 17% decline in sales.</li>
<li>1H guidance implies that 2Q will also be weak. Full-year FY Mar-24 guidance implies an unlikely 50% sequential increase in net profit, putting the shares on 32x projected EPS.</li>
<li>A return to peak EPS next fiscal year would drop the P/E ratio to 21x, which used to be the top of TEL's P/E range. Sell. </li>
</ul>


Thanks to strong demand from China, 1Q results at Tokyo Electron (TEL) were just bad, not horrible. Operating profit was down 30% YoY on a 17% decline in sales.
1H guidance implies that 2Q will also be weak. Full-year FY Mar-24 guidance implies an unlikely 50% sequential increase in net profit, putting the shares on 32x projected EPS.
A return to peak EPS next fiscal year would drop the P/E ratio to 21x, which used to be the top of TEL's P/E range. Sell. 


Tokyo Electron (8035 JP): Saved from Disaster by China

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

Tokyo Electron Beats Its 2Q25 (Sep-24), Raises FY25 Forecast, Increases Dividend, and a Buyback

TEL exceeds 1H25 guidance, raises forecasts and dividend, with positive product mix shift towards AI-related Capex. Stock trading at attractive...